Thursday, October 2, 2008

On Oct 2, 2008 the world’s biggest public smoking ban came into effect in India. With 1 million people losing their life every year due to smoking, the ban was implemented to prevent smoking in public places like stations, government offices, airports, amusement hubs (theatres, malls etc), and hotels among others.

India is the third largest market for cigarettes, with up to 250 million smokers and around 102 billion cigarettes sold every year. Though it is too soon to know whether the ban would be a success or not, it did fail on the first day as the authorities were ignorant about the new law. Further, ITC along with Indian Hotel Association is planning to go to the Supreme Court in November to challenge the ban. Higher taxes, pictorial warnings and now a ban are likely to come as a big blow for India’s largest cigarette manufacturer, ITC. The company earns around 60% of its revenues from the cigarette division.

Tuesday, September 30, 2008

A cluster is a type of parallel and distributed system, which consists of a collection of inter-connected stand-alone computers working together as a single integrated computing resource.

A Grid is a type of parallel and distributed system that enables the sharing, selection, and aggregation of geographically distributed ‘autonomous’ resources dynamically at runtime depending on their availability, capability, performance, cost, and users' quality-of-service requirements.

A Cloud is a type of parallel and distributed system consisting of a collection of inter-connected and virtualized computers that are dynamically provisioned and presented as one or more unified computing resources based on service-level agreements established through negotiation between the service provider and consumers.

At a cursory glance, Clouds appear to be a combination of clusters and Grids. However, this is not the case.

Clouds are clearly next-generation data centers with nodes “virtualized” through hyper visor technologies such as VMs, dynamically “provisioned” on demand as a personalized resource collection to meet a specific service-level agreement, which is established through a “negotiation” and accessible as a composable service via Web Service technologies such as SOAP and REST.

For a tribe that calls itself ‘Value Investors’, this is nothing but an investing world equivalent of ‘Harry Potter’. Infact, on second thoughts, this could be even bigger because while the wand wielding child wizard had more than a few tomes dedicated to his histrionics, this is probably the first and the last authorized biography of arguably the biggest financial wizard of our times.

We are referring to one Mr. Warren Buffett and his first authorised biography (The Snowball: Warren Buffett and the Business of Life) that hit the stands yesterday. And like with most of his other endeavors, especially of the investing types, the timing could not have been more impeccable here as well. With the US financial industry roiled in one of the worst crises in decades and with reputation of quite a few firms in complete tatters, the book about a man whose investment techniques are widely believed to be the gold standard has indeed come as a breath of fresh air.

Thursday, September 25, 2008

While the US and European banks are barely managing to stay afloat, Japanese banks are beginning to flaunt their might. This has been amply demonstrated in the past few weeks when Mitsubishi bought a 20% stake in Morgan Stanley and Nomura acquired Lehman’s assets in Asia.

Ironically, while the excesses of the 1980s made the Japanese banks flounder, consequently taking them considerable time to recover from the same, it is this very fact that has more or less insulated them from the subprime malaise which has badly afflicted US and European banks. During the boom, Japan received a lot of flak for making acquisitions in the US at inflated prices, which over a period of time the Japanese banks found difficult to digest.

But the US financial system at that time was robust. The scenario has reversed now. While the credit crisis has helped Japanese banks acquire stakes in US banks at attractive prices, the health of the US financial sector is now in question. Therefore, how the Japanese banks will integrate these acquisitions assumes considerable importance given that cultures in both the countries are like chalk and cheese and the fact that the financial sector in Japan is just beginning to witness signs of revival.

Saturday, September 20, 2008

The US House of Representatives (Lower House of Parliament) has rejected TARP or 'Troubled Assets Relief Program' of the US government to bail out financial institutions. The US$ 700 bn plan that would have allowed the US Treasury Department to rescue the financial system got a thumbs down yesterday by a vote of 228 to 205. This sent the US stock markets in a tizzy, as the benchmark Dow Jones Industrial index declined by a massive 777 points (7%), its biggest single day decline ever.

Warren Buffett had recently proclaimed that the financial crisis in the US was 'everybody's problem' and not just that of Wall Street. He had in fact warned policymakers that the US might face its 'biggest financial meltdown' if they did not do something to secure the financial system. Now with the bailout plan turning turtle, experts are predicting the financial system and the economy to be in dire straits. Although another version of the bailout plan will likely go before the US Congress for a vote, concerns remain that the passage of the bill could be a more drawn-out process.

Monday, September 15, 2008

Halloween is traditionally celebrated on October 31st. Its roots lie in the Celtic tradition of celebrating the harvest and trying to ward of the dangers of the impending winter. The evil spirits, it was feared, would disease the crops and the cattle and harm the ability of people to survive winter.

To ward of the evil spirits, it was tradition to keep a hollowed out pumpkin with a candle inside. The evil spirits, it was believed, would stay away from this lighted pumpkin. In modern days in modern homes the children go around the neighbourhood dressed to scare and say, “Boo - Trick or Treat?”Well, Halloween has come early this year.The evil spirits of greed and excess have made some pretty loud “Boo!” sounds and the global financial markets are in a complete state of panic.Bear Stearns had to be rescued.Lehman has filed a USD 631 billion bankruptcy protection.Freddie and Fannie – owners of 30% of the total home loans in USA – had to be rescued by the US government.

AIG – the world’s largest insurance company – has just been given a rescue package by the US government which now owns 80% of AIG. Central banks around the world are lending money to these financial giants – who were hailed as geniuses by all the media – to keep them alive. Announcements of losses of hundreds of millions of dollars and rescue packages of tens of billions of dollars seem like daily occurrences.

Thursday, September 11, 2008

Today, seven years ago to this date, is the day when the terrorists brought their war on American soil.

As the TV cameras telecast the visuals of the WorldTradeCenter collapsing, there were many people celebrating in some parts of the world.

It was, they argued, appropriate to celebrate: The Great Satan had been inflicted a body blow. It serves them right, said the sympathizers of the Taliban, as they danced in the streets. The Yankees have caused enough harm in many parts of the world and it is time that they were taught a lesson. The Yankees must leave the Middle East and its oil to the locals and not the Zionists or the favoured few families that control the oil wealth in the deserts.

One man’s terrorist is another man’s freedom fighter.

An eye for an eye, said the great Mahatma, will merely make the whole world blind.

American policy has indeed been harmful in many instances. Many of us in India are upset at the support given to Pakistan - which most Indians regard as, to use an Americanism, "a terrorist state". The 9/11 attacks were seen by some Indians as an opportunity for the US to work closer with India. The world’s two largest - and self-styled greatest - democracies working together in a new world order.

Well, there is a new world order now.For decades we had a "uni-polar" world. America was the Empire. To some it was Evil, to some it was great, but it was an "Empire".

It may not have been a fair "umpire" though. US foreign policy was driven by a combination of what the "Zionists" wanted (the Israel policy); what the multinationals wanted (engage China so that its labour markets are opened for building the world’s low-cost factory); and what the local Americans wanted (cheap goods, cheap oil, and cheap money). Somewhere in this equitation were many other important players each with their own angle of ensuring that business interest drove foreign and economic policy.

Friday, September 5, 2008

Are you the kind of person who loves to earn attractive returns from stocks without taking big risks?

If yes, then you’ll definitely want to hear what I’ve got to say.

You see, I recently identified a remarkable investment opportunity in the Power sector - one that could deliver returns in excess of 100% over the next few years.

There’s huge demand in this sector, and it’s literally growing up by the day. So it’s a great opportunity for you to make money.

Additionally, the stock prices of companies best placed to benefit from this demand have crashed. So if you act quickly, you can also get these "Blue-chip" stocks for dirt-cheap.

Millions of Indians across India have learnt to live with power shortages day in and day out. But there's something they still don't realize.

This is only the beginning. The worst is yet to come.

You see, India is and has always been short of power supply. Power cuts have been a part and parcel of people's lives. And now, factors like growth in household and commercial consumption, electrification of rural areas and manufacturing growing faster are aggravating the problem even further.

According to a report, India's demand for power will soar to a whopping 315,000 MW by 2017 - more than double the current installed capacity.

Meeting this demand will require a huge investment...which means this is a great opportunity for you to make money.

Yes! A lot of money is going to be spent in this sector in the coming years.

To begin with, a spending of acouple hundredbillion dollars has been proposed to improve the infrastructure in the power sector, in areas ranging from setting up power plants to delivering this power to the people properly.

There are only a handful of companies that are big enough to take on this kind of work and benefit directly from the increase in spending.

These are all well-managed companies which have been doing well... and in my view will continue to do well over the long-term.

When shares of such companies are available at attractive prices, why take unnecessary risks to earn extraordinary returns?

Buy these stocks and earn attractive returns easily without taking big risks. So try to grab them at the earliest.

Wednesday, September 3, 2008

Influenced by the rising strength of the dollar, the Indian rupee has been on a depreciating trend since the start of the year. Infact, the rupee fell to 44.88 a dollar, the lowest level in almost 21 months on speculation that oil importers were buying dollars as crude fell toward US$ 100 a barrel. Also contributing to the Indian currency’s decline has been the weakness in the stock market, as foreign investors choose to exit from the same on concerns of a global meltdown. India’s worsening current account position has also played a rose in the rupee’s fall. India imports around 70% of the oil that it consumes and hence the import of oil plays a dominant role in determining the current account position. According to Bloomberg, India's average oil import costs increased to US$ 8.2 bn a month this year, from US$ $5.5 bn in 2007.

Interestingly, as per reports in a leading business daily, exporters who were trying to sell dollars at 40/US$ have chosen to stay on the sidelines when the rupee is just a hair’s breadth away from breaching the 45/US$ mark. The RBI, which actively intervenes in the forex market, has been subdued so far. Unless the fundamentals, which have led to a weakening rupee, drastically change, the RBI is unlikely to favour a stronger rupee.